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The link between service privatization and price distribution among consumer types: municipal water services in the Spanish region of Catalonia

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  • Antonio Miralles

Abstract

In the Spanish region of Catalonia the industrial sector sensibly lobbied for the privatization of municipality-produced water services in the period 1996 – 2002. This paper analyzes the extent to which this result is consequent with observed measures of cross-subsidies in favor of residential consumers. I run a treatment-effects regression on a sample of 133 municipalities in 2000 and 2001. Recent privatization has a positive effect on the weight that the local regulator attaches to industrial users’ welfare when deciding water tariffs. I conclude that an increase of industrial customers’ group size has a twofold effect on the cross-subsidy in favor of residential customers: a direct positive substitution effect and an indirect negative political support effect through lobbying for service privatization.

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  • Antonio Miralles, 2008. "The link between service privatization and price distribution among consumer types: municipal water services in the Spanish region of Catalonia," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 26(1), pages 159-172, February.
  • Handle: RePEc:pio:envirc:v:26:y:2008:i:1:p:159-172
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    Cited by:

    1. Xavier Fageda & Germa Bel, 2008. "Local privatization, intermunicipal cooperation,transaction costs and political interests: Evidence from Spain," IREA Working Papers 200804, University of Barcelona, Research Institute of Applied Economics, revised Apr 2008.
    2. Germa Bel & Xavier Fageda, 2008. "Reforming the local public sector: economics and politics in privatization of water and solid waste," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(1), pages 45-65.

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